Dow, S&P 500 hit new highs: Trading takeaways
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) closed at record highs as stocks extended their rate-cut rally. The US is on track for a healthy third quarter as the Atlanta Fed’s GDPNow tool tracks 2.9% quarter-over-quarter GDP growth. Meanwhile, it’s a quiet week on Wall Street, which could be good for markets as they look to secure another week of gains.
Yahoo Finance Markets Reporter Josh Schafer breaks down his top takeaways from the trading day.
For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.
This post was written by Melanie Riehl
Video Transcript
The Dow SP 500 closing at a new at a new high.
Stocks extending the Fed rate cut Rally here with the trading day takeaways.
Yahoo finances Josher Hey, Josh.
Yes.
So we have our 40th S and P 500 record close of the year.
So we have to start right there.
And I’m gonna flip over to some of our charts here to just take a look at what’s been going on with the major index so closing at 5718 today, barely eking out a record we should know.
But, Josh, one thing I wanna point to here that was interesting.
We had out performance from the Equal Weight S and P 500 day.
That was a 0.5 compared to the S and P 500.3.
And I point that out because that’s really been the trend now for going back over even the last three months.
So I’ll flip to a three month for the S and P 500 up about 4.65%.
You look at the equal weight over that time up about 7.7%.
This is one of the measures of sort of the broadening of that rally, right?
Remember, the equal weight S and P 500 isn’t driven more by bigger companies.
So if that’s going up more, that actually means we’re seeing a broader participation from the index.
And that’s what one thing that has strategist calling for the S and P 500 to hold on reach 6000.
By the end of the year, that would be at least another 5% and that would put together a pretty good year for the S and P 500.
And it’s been sort of shocking to me to see that become a little bit more of a real scenario.
That was something people talked about the beginning of the year, sort of uber bullish.
Now it feels like it’s relatively in play.
When you talk to strategists who are more sceptical, Josh, what do what do they bring up is a value?
Is it seasonal?
Is it election?
Yeah, so I mean, valuation is still very much stretched, right?
We’re talking about sort of the price to earnings ratio.
I just use the word egregious.
Some would say that right?
And they’re looking for the benchmark index to probably do that right if they feel like it’s egregious.
But I think a lot of people right now, Josh, you can see we’re getting to the end of September Here.
People are starting to talk about politics a little bit more, and I think the question when we’re talking about where the index is gonna end the year is, well, how much does the election over the next month and that volatility weigh on the benchmark?
Do we get a significant drawdown?
Because the election is a little bit more uncertain than people thought?
And maybe there isn’t a result on Election Night.
Does that draw down on the S and P 500?
So the rally you get after it doesn’t get you to 6000, or do you kind of survive around these levels, then post election?
You often get a rally, and so do you get a rally.
From this point, that might be how you get the 6000 Schafer bullet Point number two.
Number two.
We are taking a look at the economy, Josh.
So we had S and P Global PM IS out this morning, and their markets economist Chris Williamson pointed out, while the PM IS themselves weren’t necessarily eye popping, they were a little bit down from last month, he said.
What they do is so that’s September.
That’s the end of the third quarter, and it means we’re tracking for GDP at over 2% for the quarter.
That’s a solid quarter, right?
And you take a look at what it fan.
Atlanta Fed’s GDP now tool is tracking 2.9 percent.
Goldman’s at 3%.
These are solid quarter over quarter GDP numbers that we’re talking about here, and I think that’s part of the reason why we’ve seen Stocks rally, even though we had.
That Fed rate cut is because the economic outlook seems to be holding up right if you push through Q three.
What about Q four.
So Q four was interesting.
Even in the PM IS this morning, sentiment is starting to fall a little bit moving forward.
I think the question is, do the rate cups help that sentiment right?
So as these cuts start to come into the economy, you just got a 50 bits rate cut last week.
Does that start helping business activity and helping the labour market like people think it will, then maybe that helps out your Q four going into next year.
But, yes, you do make a good point.
Josh.
3% is not exactly where a lot of people are sitting looking out into the fourth quarter, now expected to see that high of a number 50 Shafer Point.
It’s a quiet week, and I think that’s always important to point out, because that means there’s not a lot for people to get up that about which sometimes help stocks.
So this is a chart from Bank of America and what they count here as an economic event.
So this is the amount of economic events you’re sitting next to what they consider this week, which is the best best week, and it’s no CP I.
It’s no Fed meeting.
It’s no jobs report any of those big things notably, they said they feel like P CE might be a non event this week, so they didn’t count.
I have to ask you what, They didn’t count it.
That gives us a good week.
But I think for P CE, the key is just going to be a continuation of what the Fed thinks they’re gonna see right?
Remember P CE after we get that CP I and PP I the other inflation data.
People usually have pretty good estimates of P CE.
And so those estimates are for inflation to keep falling and sort of be on that track.
I think as long as that comes in line, at least the team of Bank of America says OK, status quo status quo probably means stocks just flowed a little bit higher.
All right, we shall see, Joshua.
Thank you.